How SMEs are shaping the future of business

Small business owner opening shop
Changing landscape: when it comes to the world of business, bigger doesn't always mean better Credit: Getty

The Covid-19 crisis has turned the business world on its head and created opportunities for smaller enterprises where few existed before

Now is the time for SMEs to shine

Before the pandemic, bigger was considered better when it came to business. But the opposite is now the case, says Holly Tucker, founder of Notonthehighstreet and UK Ambassador for Creative Small Businesses

Holly Tucker

The beauty of small businesses is their chameleon-like nature – they are able to adapt and change quickly. I have long been a champion of small businesses and maintained the belief that they bring colour into our everyday grey – which is why I built Notonthehighstreet 15 years ago, and now Holly & Co. I also own a high-street shop – so I am acutely aware of the pressures coronavirus has brought.

For so long, big was considered better – even small businesses looked to big business for the “rules”. But Covid-19 has shown us that the ability to pivot your business is now the only thing that really matters – and not only for navigating through coronavirus in the short term, but with no vaccine in sight, the long term will demand that agility is built into businesses’ DNA. Luckily, this is the superpower of small businesses.

It is not just small businesses who are starting to realise that perhaps they did have it right all along. The consumer is realising the beauty in small versus big as well. Never have we seen this more than in the fondness that has grown for our independents on the high street. 

For the first time, consumers understand the vital importance they play in bringing our communities together – and we need to be awake at the wheel. Consumers must increasingly vote with their money, ensuring that it becomes the norm to get bread from the local bakers and pay that little bit more for quality and community.

Know your strengths: small businesses have a multitude of superpowers Credit: Getty

I can hear people groan, saying they don’t have a local baker or greengrocer. This is where the vital need for a drastic rethink about things such as business rates must come into play. We should also encourage online businesses who have seen a peak in sales to be tempted back on to the high street.

There is also a responsibility on the independents too, to bring retail theatre to their shops. Small business owners must give their customers everything the virtual world can’t - experience. The days of having stock for a season and unchanging decor and interactions are long gone. Humans are emotional by nature, and businesses had better remember this before they lose the most powerful tool they have: making customers feel.

The challenges ahead are not small, but they are not insurmountable. We are already talking about Covid-19 as the “great pause”: we have stood still, looked into an uncertain future and realised that creativity, colour and supporting those who want to create a community are the rock stars and change-makers of the future. 

The future is bright. The future is small.

Why companies should make a virtue out of virtue

Profit and doing good need not be mutually exclusive, says Luke Hildyard, director of thinktank the High Pay Centre – and combining the two can result in a more motivated workforce and increased engagement from consumers

Luke Hildyard

Can a company do well from doing good? There’s enough business-school literature on this to consume a sizeable chunk of the Sumatran rainforest.

But despite the countless journal articles and the ongoing debates in conventional and social media, it has still not been properly resolved. Now the economic devastation wrought by Covid-19 is going to bring it to prominence like never before.

With businesses facing the most extreme levels of uncertainty they are likely to experience in their entire careers, there are two possible paths open to them. Should they take a profit-maximisation approach, slashing jobs and investment and utilising every penny of state subsidy available?

In the short term it’s not too hard to see the temptations of this approach - particularly for executives whose bonus payments might be tied to company profitability or share price. But there are also plenty of arguments that businesses prepared to prioritise the well-being of their staff – even if it means taking a financial hit to do so, or turning their hand away from their core business and towards addressing the health crisis – will reap the dividend of a more engaged workforce and heightened public goodwill.

Cynics may be surprised to know that there are a number of companies that have taken the latter approach. For example, brewery Brewdog and distillery Leith Spirits switched the focus of their production lines to the manufacturing of hand sanitiser.

Conscious choices: many companies are opting to look after their workforce and community Credit: Getty

For locked-down households looking for momentary respite from booze, takeaways and vegetation on the sofa, fitness firm Barry’s Bootcamp was on hand with free online classes.

For smaller businesses, a creative response to the crisis affords the opportunity to dramatically increase their profile. But even larger firms have made a virtue out of virtue during the pandemic. Over a third of FTSE 100 firms have cut chief executive pay this year.

This more stakeholder-oriented philosophy need not be a financial millstone. The experience of Boohoo.com, whose share price plummeted amidst allegations that facilities in its supply chain were not adhering to lockdown or furlough rules, and that staff were being paid below the minimum wage – suggests that investors believe there will be a severe regulatory and customer response to those businesses perceived to behave most egregiously throughout the pandemic.

Perhaps the initial lesson of the crisis is that businesses of all sizes can play a role in community life. Pursuit of profit isn’t the sole purpose. By targeting positive civic outcomes beyond financial returns, companies might end up achieving both – as well as creating a better world for us all.

‘It's not all doom and gloom for UK firms’

There will be more casualties of the coronavirus within UK plc, says entrepreneur and Dragon James Caan. But we must focus on the positive consequences of the new normal

James Caan

The current global pandemic has been life-changing for many small businesses in the UK. Sadly, some simply did not make it through lockdown; they were saddled with high costs, no income and limited reserves, which quickly ran out.

Looking ahead, some businesses are hanging on by the skin of their teeth – surviving only due to the government furlough scheme, which covers the bulk of their wage bill. But when the scheme ends in October, there may be other small businesses joining the list of casualties.

Surviving businesses are experiencing a complete change and in some cases a transformation, where, rather than operating in busy, open-plan offices with the hustle and bustle of office life, we have people working from their bedrooms, kitchens and, for the lucky few, their studies.

Managing a portfolio of recruitment businesses, I have interacted with hundreds of owners and entrepreneurs over the past few months and have received mixed feedback about the current new way of working. In some instances, business owners are surprised at the way in which their staff have adapted so positively to the new world of working from home.

They have found their staff are not only more productive than they were in the office, but they are truly loving it and have increased motivation. By saving hours commuting, avoiding unnecessary meetings and being less distracted, many businesses have seen an increase in staff productivity.

Others, however, are missing the social community that office life used to provide. The clear benefits of interacting with colleagues and learning from experts by watching them work has undoubtedly been lost.

New normal: both employers and employees have seen many benefits to remote working Credit: Getty

My personal perspective is that this has been one of the most difficult and challenging times for business owners in my 35 years of experience. We may be heading towards one of the worst periods of unemployment since the Second World War, and experts warn that, when the furlough scheme ends, we could see more than five million out of work.

And while, on the one hand, continued working from home could result in the inevitable collapse in demand for physical offices in the UK, leaving us with a bleak landscape of vacant workspaces, it’s not all doom and gloom.

The price of homes outside of London should start to rise as people realise there’s less of a need to commute to work. And in order to avoid the costly business of employing a full gamut of in-house staff, outsourcing will rise with increased demand for freelancers and the self-employed. 

In this way, coronavirus is no different from the other monumental events that have changed the course of history. There will inevitably be winners and losers – but it will be the SMEs that continue to adapt as they have been for the past five months that emerge victorious.

The Power of Us

Building greater, more sustainable economic growth can improve the lives of everyone in the UK.

This is the goal of inclusive capitalism: using money and investment as a force for good, to create real jobs and better infrastructure to transform the UK’s cities and towns and tackle the biggest issues of our times such as housing, climate change and ageing demographics.

It’s something businesses, communities and individuals can all get behind and work together to achieve – and it’s why Telegraph Spark has teamed up with Legal & General for The Power of Us, a campaign that aims to identify the challenges facing society, then use some of the UK’s brightest, most innovative thinkers to help solve them.

The Power of Us: the future is in your hands.